I received an email a fortnight ago proclaiming that MPESA has finally released its API for the benefit of those who are interested in the tech developer community. This was supposed to be good news and cause for cheers. However, that anticipated reaction was not to be. There was a cold reaction to the MPESA APIs release. The colleague who broke the news to us noticed this and soon wrote back to complain about the complete lack of enthusiasm among the techies who, after all, have been waiting for the APIs release for a very long time. Finally, it is here but the developers’ attitude seems to be that “this is too little too late”. This is an issue worth investigating further to ascertain the reasons for the strange reaction to MPESA APIs release…
On close inspection, the lukewarm reception of the release started to make sense to me. First of all, contrary to trends and best practice, MPESA APIs are complex. Secondly, Safaricom released the APIs but not the documentation. So, before the developers can use the APIs, the uphill task of first studying and understanding them awaits those who choose to go that route. No wonder nobody was enthusiastic about the release after all.
One may ask why is Safaricom keeping its cards so close to its chest? After all, Safaricom CEO’s outlook towards things spans a quest for positive impact that is beyond telecoms or tech. To answer this question, one may need to first understand the Kenyan or even the African customer behavior. It is a fact that once these customers trusted a brand, they are not easily swayed. Safaricom understands this and is taking its time. The Americans, on the other hand, are stereotyped as a people always waiting for the next best thing, the next big release, and the list can go on. That is not the case in many other places in the World and that is to put it lightly. Whole religions might be opposed to that kind of consumerism. Be that as it may, that culture bodes well for an innovation ecosystem. Another reason being that the U.S. is the innovation capital of the World.
In an era where you have to disrupt yourself before someone else does, just understanding the Kenyan customers and their inclinations is not sufficient. The fact that Safaricom is not optimally engaged with developers and startups is a gap. This is the kind of gap that Safaricom’s competitors could exploit. For reasons that I am not sufficiently equipped to enumerate, MPESA competitors still choose to behave like Safaricom. Like Safaricom, their engagement with developers is limited to the conduct of competitions and hackathons. This in itself is not a bad thing to be sure. Competitions and hackathons have and will always be part of tech business. However, for a competitor aiming to unseat MPESA, that is just not going to cut it. MPESA customers already have a good service that they are comfortable with as far as mobile money is concerned. Mobile money to them is MPESA. Can you make them migrate to your service by simply offering something similar?
For people to move from an existing service to another, you cannot just offer a similar service. MPESA is well established with an incredible brand equity. Even the whole country of Kenya has become synonymous with it. Why should the customer migrate to a different application that is offering a similar service/product. In my view, this is not just going to happen without a winning business model and deliberate approach from Safaricom’s competitors.
While there will always be competitions and hackathon and prizes, these alone are not sufficient if your aim is to compete effectively with an established juggernaut such as Safaricom’s MPESA. I have recently heard the correct noise about an innovation partnership between Barclays and Moringa School. I do not have the formula or the business model that Barclays and Moringa School may adopt. However, from the little information that I could glean the partnership could deliver good results for both entities. Moreover, Barclays and others could probably start to leverage the vibrant tech ecosystem in Nairobi to gain traction in the mobile payments market. If they could make inroads against MPESA here in Kenya, then chances are they could scale successfully in their other markets as well.
It is understandable if Safaricom kept its cards close to its chest as they dominate the market. Indications are that even Safaricom realizes the limitations of their current approach. The fact is Safaricom is an innovative entity and that is why they released their API, in spite of the fact that the APIs are complex and were released without documentation. What puzzles me is that Safaricom’s competitors are not also interested in a paradigm shift that would most certainly only benefit them. After all, what market share do they have to lose. Safaricom holds the aces in this game, although many gaps in their business model persist. While Safaricom is an innovate Telecom company, it had never been a tech startup. This fact is most probably the reason behind that kind of mind-set resulting in these gaps. Remember that the whole World is going mobile and Safaricom/MPESA is a pioneer. If Safaricom thought like a startup from the time of MPESA’s release in 2007, it probably would have become a global tech company by now. Leveraging of startups and meaningful partnerships with them by established entities such as the banks would ultimately give MPESA a run for its money. That kind of endeavor starts with the release of developer friendly APIs, partnerships with innovate startups, and widening the scope of startups to look beyond Kenya. A scouring look at the Nairobi tech landscape does not seem to reveal that such an approach is taking root.